The Volatility Quality Zero Line Indicator is a technical analysis tool used by traders to determine market volatility and identify changes in market trends.
Volatility is the rate of change in a stock’s price over a given period of time. Stock price volatility is usually correlated with increased risk, which helps investors predict probable future swings.
Volatility Quality Zero Line Indicator Overview
The indicator turns green when the market is in a bullish phase, and red when the market is in a bearish phase.
The Indicator can be a useful tool in combination with other momentum indicators such as RSI and MACD, but it may not work well in choppy markets and may generate late confirmations during sluggish price trends.
Volatility Quality Zero Line Indicator Explanation
The Volatility Quality Zero Line indicator is based on a Weighted Moving Average and is displayed on a chart as a line or histogram that oscillates around a zero level.
When the line or histogram is above zero, it signals bullish conditions, and below zero, it signals bearish conditions.
Traders use this indicator to enter long positions when the line changes from red to green and above zero, and short positions when the line changes from green to red and below zero.
Volatility Quality Zero Line Indicator: Buy Condition
- The volatility line changes color to green and rises over zero.
- A substantial resistance is breached or rejected by the price.
- As long as the Volatility Quality rating is positive, hold onto your buy positions.
- Once the volatility line goes red and falls below zero, it is time to exit.
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Volatility Quality Zero Line Indicator: Sell Condition
- The volatility line changes to red and detracts from zero.
- Price rejects resistance or bursts through strong support.
- As long as the Volatility Quality number is negative, hold sell positions.
- Once the volatility line turns green and rises over zero, take a profit.